In spite of much exciting talk about the growth of Champagne in Far Eastern markets, the country marked out by most observers as most promising export destination for Champagne over the next decade is in fact a resurgent US.

Indeed, if those criticising the economic policy choices of the UK government needed persuasive evidence that the path chosen by the US administration may have offered a quicker and less painful exit from the global downturn, the performance of - and prevailing optimism within - the Champagne sector might not be a bad place to start.

The rigours of the downturn aside, the relative buoyancy of the US market today could be seen as delayed fruition of the potential many have long believed this market to have.

As a new just-drinks/IWSR report, 'Global market review of Champagne – forecasts to 2016', suggests, the US has been a "source of some frustration" among Champagne producers as it has failed to live up to the promise of ten years ago or more when it seemed poised to take the UK’s position as Champagne's number one export market. The UK's comparatively sluggish and faltering recovery from the downturn appears to offer the US a renewed opportunity to gain ground.

While the economic recovery in the US itself may be fairly fragile, it has still led to a significant recovery in Champagne shipments, the report states. Volumes rose by more than 50% in 2010 and 2011. In 2011, shipments were up by around 2.4m bottles, although value growth lagged slightly behind this rate due to the impact of exchange rates. However, volumes remain "well below" the pre-recession levels of 2006 both in terms of volume and value. 

However, it is the premium nature of the US market which makes its current resurgence particularly exciting for Champagne exporters. 

Most significantly, the US market is dominated by the Champagne houses - the famous grande marque names such as Moët, Veuve Clicquot and Perrier-Jouët - as opposed to the cooperatives, which have built up a strong presence in other countries. While the cooperatives did increase sales by almost 55% in 2011 - from a small base and with a resulting drop in average prices - the 'maisons' still control around 93% of the US market in value terms.

Another indicator of the higher value of the US market is the percentage of the market represented by Brut non-vintage offerings, which account for 74% of the US market, well below the global export average of over 83%.

Higher-value rosé shipments have now reached a ten-year high at 2.8m bottles, matching the volumes in the UK. The US now accounts for almost 22% of pink Champagne exports.

Meanwhile, the US market for prestige cuvée Champagnes is double the size of the luxury segment in the UK at almost 1.3m bottles. Moreover, the report points out, prestige cuvées account for almost one fifth of the market in value terms and represent the fastest-growing Champagne category in the US.

"We have been used to numbers in the US which have not been good," says Bollinger president Jérôme Philipon. "When the crisis hit us in 2008, the first market to be impacted was the US. Shipments just stopped at the end of 2008. But 2011 was a very strong year for most of the differentiated brands with an image in the US, as was the beginning of this year, because the [distribution] pipeline was empty."

Another attribute marking out the country as a high-value market for Champagne relates to distribution. In the US, multiple retailers only account for between 20% and 25% of Champagne volumes, in comparison with almost 40% in the UK. Around 40% to 45% of sales are through specialist wine shops, with as much as 30% to 35% sold through higher-margin, higher-priced on-premise channels.

There are one or two less helpful attributes to the US market that may temper optimism slightly. For one, as the report points out, exporters to the US are subject to the vagaries of the country's "unwieldy three-tier distribution system and varying regulations in different states".

Champagne also suffers from the fact that domestically-produced sparkling wine can also call itself Champagne. However, on the positive side, the report points out that sparkling wine consumption has been growing strongly - by 14% between 2004 and 2010 - and traditionally Champagne does well in countries with a strong sparkling wine tradition. While domestic sparkling wine does have a 65% market share, around 75% of this is under US$7.50 a bottle, far below the level where it would be competing with any Champagne.

Overall therefore, with a stronger economic recovery and a generally favourable market profile, the US is expected to see a period of solid volume and value growth for Champagne over the coming five years. 

The just-drinks/IWSR report predicts volumes will rise from a forecast 21m bottles in 2012 to 25m bottles in 2016. While the report does not expect the US to reach the volume levels of the UK in the near future - this in itself could be seen as positive as it reflects the premium emphasis of the market - it does forecast that it will overtake the UK in value terms by 2016, with value sales rising to EUR510m from a forecast EUR400m in 2012.

Expert analysis

Global market review of Champagne – forecasts to 2016

Global market review of Champagne – forecasts to 2016

Some of the issues and challenges addressed in the previous edition of just-drinks' Champagne report continue to influence a category struggling to grow. Recovery from economic downturn and tumbling s...read more